Fiscal Deficit May Increase by 6.8% of GDP: Report
The Controller General of Accounts on Friday said that country’s fiscal deficit has expanded to 83 per cent of Budget Estimate within the April-June quarter primarily thanks to lower collection and better expenditure for Covid-19 relief. According to a report on Indian economy by Emkay Global Financial Services, low economic activity and lower tax collections including expanded expenditure in schemes like Gandhi Rural Employment Guarantee Act, PM-KISAN and extension of Pradhan Mantri Garib Kalyan Yojana till November, 2020 has created a scenario where the deficit would widen.
The current expansion (in deficit), the brokerage said, is primarily thanks to low economic activity within the last two months (e-way bill 7 per cent less than last year in June-end) and an extension of the tax filing deadline to Aug’20.
“Capital spending has surged 40% thanks to ways and means advances for FCI (high procurement) and road spending (base effect thanks to low spending in Q1FY19 thanks to elections); excluding these two, spending has declined by 4%,” Emkay has said in its report.
The fiscal deficit is that the total amount by which the government’s expenses for a year exceeds its revenues.
The concern on the deficit comes from the trend witnessed within the half-moon of current fiscal. Lower net revenue receipts and elevated expenditure has pushed the fiscal deficit to 83 per cent of budget estimate within the three month period of April-May.